Dollars and cents. The more businesses read about cyberattacks burning deep financial holes into the pockets of innocents, the more attention they turn towards their cyber security and insurance needs.
Cyber criminals are almost always one step ahead of the game. While companies react and respond to current threats, hackers are gleefully transforming the cyber risk landscape with new tactics, software bugs and modes of attack.
Insurers and risk managers must do everything they can to keep up with this rapidly evolving risk landscape. Falling too far behind in cyber updates could be absolutely catastrophic.
“The demand for cyber insurance has skyrocketed over the past few years,” said Fred Karlinsky, Co-chair of Greenberg Traurig’s Insurance Regulatory and Transactions Practice Group. “Total annual cyber insurance premiums have increased from an estimated $1 billion in 2012 to $3.25 billion in 2016, and growth is expected to continue.
“Cybersecurity insurance is already heavily concentrated in the retail, healthcare, technology, and telecom sectors, but many smaller companies forego cyber liability insurance even though the risks facing them are often as great as, if not greater than, the risks facing larger companies. Further, companies that have purchased cyber insurance often find out that they do not have the coverage they thought they did.”
It’s widely accepted that education plays a primary role in the future of cyber insurance. Companies need to be proactive in their approach to cyber risk, their mitigation strategies, and their insurance policies.
Those purchasing cyber insurance should consult with their broker and make a close inspection of everything proposed in a policy to ensure their needs are adequately covered, according to Karlinsky, who is moderating the upcoming exclusive webinar ‘Update in cyber claims and coverage’.
“There are several dozen carriers that offer cyber liability insurance, but what exactly is covered, and how it is covered, differs significantly from carrier to carrier,” he told Insurance Business. “The cost of providing notices to affected consumers of a data breach, and associated legal costs, are usually covered, but business interruption and reputational risk may be excluded.
“The triggers on these policies can also be awkward because they usually offer first-party coverage, but policyholders often expect them to work more like third-party D&O or E&O coverages. Deductibles and retentions also vary, so it’s extremely important to understand what’s in the policy.”
Find out more about developments in cyber risk and insurance by joining the exclusive webinar ‘Update in cyber claims and coverage’ on April 19 at 2pm ET.